Written by: Ritwick Singh and Utkarsh Bhushan Pandey
India is a country with a mixed economy. However, we cannot deny the fact that there is an autonomy of the highest-earning sector of the economy — agriculture. As we are aware of the fact that India is an agrarian country where farmers play a vital role in all the apparent sectors of the economy, namely primary, secondary and indirectly tertiary, there is a lot of expectation from this portion of the money-making sector. It is also true that despite being the largest contributor in the Indian economy, the agriculture sector is not fully developed.
Not to blame the weather, but due to certain manmade errors or blunders — namely poor industrial waste management, pollution, use of non-PUC vehicles, e-waste hazards, etc. — the cases of farmer suicide and decrease in food grain supply were on the rise. The government has taken certain steps to ensure the allocation of the right amount of resources to the farmer community. In order to regulate the action of the largest economic sector of our country, lawmakers have now come up with the three new farm bills.
This article gives a detailed account of the three bills and explains the pros, cons and effect of the amendments on the farmers. A personal opinion is also stated and does not intend to harm any idea or individual. This is purely an exercise of our right to speak and be heard, along with stating facts about the main subject.
The Central government introduced a variety of schemes and services to increase the income and thus the overall economic condition of the farmers. Thus, a new farm bill was introduced by the Centre that was related to the crop price and market value. This bill was introduced on June 5, 2020. The main objective of this bill was to simplify agricultural produce trade and commerce and was passed in the Lok Sabha on September 17, 2020.
President of India Ram Nath Kovind gave his assent to three farm reform Bills on September 27, 2020. Our Prime Minister Narendra Modi praised these bills by saying that they will be “a turning point in the history of Indian agriculture.” The Indian Agriculture Act of 2020 is a set of three acts of the Parliament of India that .was introduced in September 2020. These acts shout to bring necessary reforms in the marketing of the agriculture sector. Introduced in the Parliament, these Acts intent to make trading free of middlemen and take the market directly to the farmer. One of the bills also proposed to remove cereals and pulses from the Essential Commodities list.
Both The Farmers (Empowerment and Protection) Agreement on Price Assurance and Farm Service Bill 2020 (or the Contract Farming Law) and the Farmers’ Produce Trade and Commerce (Promotion and Facilitation) Bill 2020 (or the Market Place Law) were introduced in the Lok Sabha on September 14, 2020, and passed on September 17, 2020. They were then passed in the Rajya Sabha on September 20, 2020. The bills got the Presidential assent on September 24, 2020. The third Act, namely the Essential Commodities (Amendment) Bill 2020 was introduced in the Lok Sabha on September 14, 2020, and passed on September 15, 2020. This Act was passed in the Rajya Sabha on September 22, 2020. This Bill received the Presidential assent on September 26, 2020. The Bill was introduced by the Minister of Agriculture and Farmer Welfare Mr Narendra Singh Tomar.
The Farmers’ Produce Trade and Commerce (Promotion and Facilitation) Ordinance, 2020, was promulgated by the Union Cabinet on June 5, 2020.
The Farmers’ Produce Trade and Commerce (Promotion and Facilitation) Bill allows barrier-free inter- and intra- state trade of farm produce. Previously, farm produce was sold at notified wholesale markets or mandis run by 7,000 Agriculture Produce Marketing Committees (APMCs). Each APMC had licensed middlemen who would buy produce from farmers – at prices set by auction – before selling it to institutional buyer like retailers and big traders.
With these Bills, the Central government freed the farmer to sell their crops anywhere in the country. This would increase business between the states and help reduce expenditure on marketing and transportation.
The farmers with these Acts can eliminate middlemen and sell directly to institutional buyers at price to be agreed between them. However, farmers’ groups and unions are worried that this step will expose them to corporates, who have more bargaining power and resources than small and marginal farmers. Over 85% of the farmers own less than two hectares of land, making it difficult for them to negotiate directly with large-scales buyers.
The Farmers (Empowerment and Protection) Agreement on Price Assurance and Farm Service Bill 2020 was promulgated by the Union Cabinet on June 5, 2020. The new legislation is aimed to empower farmers for engaging with processors, wholesalers, aggregators, large retailers, exporters etc. on a level-playing field. Price assurance will be guaranteed to farmers even before they sow their crops. In case of a higher market price, farmers will be entitled to this price over and above the minimum price.
This law allows farmer to enter into an agreement with agro-firms, exporters or large buyers to produce a crop for a pre-determined price. However, here again, farmers are worried that if the MSP is not put in place for corporates, the government will have no control or say over the prices that corporates offer to the farmers.
Thus, their demand has been to link contract prices to the MSP. This will create a uniform national structure for contract farming through a harmonious relationship between the farmer and the buyer before the production of any farm produces.
The enactment of contract farming is the part of new legal support for agriculture market. It is a point of intervention into the other two enactments that modify the essential commodities act and reduce the power of APMCs with the objective of setting up a national market for food.
Contract farming will increase the permanent income of every farmer. Contract farming will give rise to employment opportunities to farmers in rural areas who work on the field.
Contract farming will also diminish the burden on Central- and State-level employment system. It will increase the investment of the private sector in agriculture.
The Essential Commodities (Amendment) Bill 2020 was promulgated by the Union Cabinet on September 14, 2020. The Act gave the provision to remove commodities like cereals, pulses, oilseeds, edible oils, onion and potatoes from the list of essential commodities. The Bill proposes to allow economic agents to stock food articles freely without the fear of being prosecuted for hoarding.
It also aims to remove the fear of private investors of excessive regulatory interference in their business operations. The freedom to produce, hold, move, distribute and supply will lead to harnessing of economies of scale and attract private sector/foreign direct investment into the agriculture sector. It will help drive up the investment in cold storages and modernisation of food supply chain.
However, the farmers worry that unlimited hoarding of produce can lead to artificial price fluctuation and lower the price for farmers after they harvest and are ready to sell.
The liberty to fabricate, hold on to make a move, distribute and supply will steer to harnessing economies of scale and fascinate the private sector. Funding in cold storage and modernisation of food supply chains will grow. This Act will produce a competitive market environment and stop misuse of agriculture produce that happen due to absence of storage facilities.
According to many farmers’ groups, an alternative private mandi will lead to an ultimate closure of the existing APMC mandis.
Although farmers will not be expected to pay any tax in a private mandi, a big state such as Punjab, where state-run APMCs operate at a large-scale, is concerned that the farm bills will lay down an agriculture market mechanism that will lessen their price security net.
Farmers of Uttar Pradesh, Punjab and Haryana are angry with the provision of these Bills as they are afraid that these Bills will become a platform to scrap a strong support system of APMCs and mandis, which provide a price guarantee net to the farmers.
A host of organisations from corporates to traders even the last customer can obtain produce directly from the farmers without requiring a licence — an alternative far from the APMC structure. Without the involvement of middlemen, corporates can directly obtain from farmers. Farmers’ groups are afraid of the MSP guarantee — their safety net since the Green Revolution of 1960s — being abolished behind the excuse of granting farmers a larger playing ground.
A removal of geographic restrictions will affect small farmers, who may find it difficult to avail potentially better prices at markets further away because of travel and storage constraints.
Furthermore, farmers’ unions have said that there were no such restrictions on farmers to sell outside of the mandis earlier too, and so, potentially removing the mandis to allow farmers to sell outside will in fact endanger the job of millions who work there.
The farmers are demanding a repealing of the Commission on Air Quality Management in the NCR and Adjoining Ordinance 2020 as well as removal of the punishment and fine for stubble burning. Farmers’ unions are also demanding a legal guarantee from the government that the MSP system will continue.
However, the key demand of the farmers is abolition of the three laws that will lead to decontrolling of their crops. Currently, even the 20+ crops for which MSP has been declared are not procured at that price.
The farmers’ demands can be listed as below:
Once these Bills were passed by the Parliament, the farmers started worrying that they would be forced to sell their produce in an open market with no fixed price. Instead, they would have to set a price based on the contract between the corporate and the farmer.
The Price Assurance Bill doesn’t impose any system for price fixation. Thus, farmers believe that free choice given to private corporate houses be equal to conduct farmer exploitation.
The farmers’ protest against the new bills is appropriate in its own way, as the protest is for their right. This is simply because the new bills introduce privatisation in the agricultural sector, which will mostly benefit large-scale farmers. There is great apprehension among farmers that by abolishing the mandi system, they will not get an assured price for their crop. Thus, the farmers community continues to demand the withdrawal of the three laws and continuation of MSP system seems to be certainly justified.
Farmers are dejected because of these three bills, as the government is trying to privatise the agricultural sector, which will help boost the economy since India is an agrarian country. This is a basic Indian economy model that has been taught to us in schools. The government wants to abolish the MSP because it will create higher profits for corporates. Hence, protests ensued.
Basically, the government is trying to abolish our primary sector by indirectly channelling farmers’ income to the tertiary sector so that corporate businesses can flourish. Big farmers with large landholdings will be in profit, but small farmers who have small landholdings will be in great loss. This can be understood as a simple routine illustration of the difference between farmers working as a part of the cottage industry versus the ones working for the secondary sector. The difference lies in the following: cottage industries can be self-sufficient, but the government wants to somehow control the primary, secondary and tertiary sectors as they form a larger part of our economy.
Earlier, hoarding essential commodities was illegal in India, but it was modified by the Central government in 2020. Now, it is not the case. Unlimited hoarding is now legalised in the country because of the new bills. Farmers with large landholdings will be in profit because of hoarding as they would be able to fluctuate the price of their crops at the time of shortage, while small farmers won’t be able to because they have small landholding and less productivity.
In contract farming, corporates will fix a rate to the farmers at the time of cutting of crops, but if the price fluctuates to a higher price in the market, the farmer won’t be able to sell outside because of the contract signed by them. If the middlemen are removed, farmers will not be able to sell their produce in the market at a reasonable price.
Before the Trade and Commerce Act, 90-94% of the farmers were selling their produce outside the mandis and only 6% of the farmers were selling it off to the nearby mandis. But because of these bills, farmers will be able to sell their produce online and in any of the state via traders.
The farmers’ protest is being supported and backed by prominent figures and celebrities of our country. Nationwide anger still prevails against the government with regards to the new farm bills. Most states in the country are opposing the bills and demanding amendments.
In our opinion, the Central government should accept the farmers’ demands. It should either withdraw these three laws or amend them according to the way the farmers want. Farmers are the backbone of our country and provide food to the nation. Thus, we conclude by opining that their queries and demands should be addressed by the government in a proper way, without having to protest or punish any individual or worst, without having to go against the law.